SMSF and Property

Before purchasing a property in an SMSF, make sure you do all the necessary checks, particularly where borrowing is involved.

1. Is it the right investment for the superannuation fund?

The investment strategy of the SMSF needs to be considered in regards to the range of investments available to the trustee. If it is noted that the purchase of a property will cause the range of investments permitted under the investment strategy to be out of alignment, the trustee should consider amending the investment strategy.

2. Does the fund have the resources to purchase the property outright?

Initial questions the trustee needs to answer are:

  • Will the SMSF purchase the property using available resources of the SMSF;
  • Is it prepared to commit a significant portion of the SMSF assets towards the purchase of a ‘lumpy’
    asset at the expense of diversification; and
  • Will it be more prudent to purchase a property of a value greater than the available resources, using borrowed funds to complete the purchase.

3. Should the property be purchased in the SMSF or in another entity?

Once the decision has been made regarding the property to be purchased, the next consideration is the proper structure in which the property will be owned. Will the trustee of the SMSF own the property or will, for example, the SMSF own units in a unit trust that will, in turn, own the property?

Unit trusts can provide a number of advantages in comparison to holding the property in the SMSF. They include:

  • Providing protection for other assets of the SMSF in the event of accidental injury at the property; or
  • Enabling activities that would not be permitted if the property was being purchased by the SMSF/bare trustee under am SMSF borrowing arrangement, e.g. significant improvements or development of the property.

4. Will the trustee borrow to acquire the property?

Having decided on the purchase and the structure, it is likely that the decision as to whether the fund will enter into an SMSF limited recourse borrowing arrangement (LRBA) will also have been made. The next decision could be whether the borrowing will be from a bank or other financial institution, or from a related party. Further to that, the amount that would be available for purchase under the borrowing would need to be ascertained.

5. How will the property be managed following the death of a member?

Once the SMSF has purchased an asset, such as property, which forms a significant (‘lumpy’) portion of the assets of the SMSF, consideration needs to be given to what would happen in the event of the death of a member. For example, it may be necessary for the property to be sold or transferred to beneficiaries, if the entitlements of those beneficiaries were required to be paid out of the SMSF. That would most likely occur when adult children or more remote dependents are the beneficiaries.

If the surviving spouse is to be the recipient of the death benefits, then the funds, including the ‘lumpy’ assets, could remain in the SMSF and provide a pension to the surviving spouse. That is predicated on the assumption that sufficient income will be generated from the property and other assets to meet the minimum pension requirements, or the higher cost of living requirements, of the spouse.

When the SMSF has borrowing obligations to meet, the situation is compounded.

More considerations

Some subordinate considerations, if entering into an SMSF borrowing arrangement, include:

  • Will the fund have sufficient liquidity to meet ongoing loan payments?
  • Does the property to be purchased comprise multiple titles?
  • Is there a plan to develop or significantly improve the property?
  • Does the contract to purchase include the purchase of ancillary items, e.g. furniture in an apartment or machinery in a factory?
  • Will the appropriate documentation be available prior to signing the contract?
  • Who will sign the contract as purchaser?
  • Who is the vendor?
  • Who will occupy the property after settlement?


In the event of the disability of a member, particularly when the expected contributions in respect of that member are committed to meeting loan repayments, the fund can incur significant financial difficulties. Planning for that should take place at the time of purchase.

Multiple titles

Generally, purchases under the SMSF borrowing arrangements must be under a single title to meet the single acquirable asset provisions. Exceptions to that rule include apartments and car parks that cannot be separated, and farms and factories that have major buildings across multiple titles.

Development or improvement

If the proposal is to develop or significantly improve the property, a standard SMSF LRBA is unlikely to suit. Purchase through a unit trust, most likely using related-party lending, may overcome the restriction.

Ancillary items

The single acquirable asset provisions would be breached if the borrowing is used to purchase ancillary assets, such as furniture in an apartment, machinery in a factory or equipment on a farm. Those items should be purchased using SMSF funds, rather than borrowed funds.

Documentation and signing the contract

The trustee of the SMSF should not sign the contract. Preferably, the bare trust documentation should be available prior to entering into the contract, so as to avoid any subsequent repercussions. Rules as to the timing of signing both the bare trust documents and the contract of sale vary across each state or territory.

In NSW, Victoria, Tasmania, the ACT, South Australia and Queensland, the purchaser should be the name of the holding trustee only. There should not be any references to “as trustee for the bare trust” or “as trustee for the SMSF”. If you get this wrong, it may result in adverse stamp duty implications. 

A corporate holding trustee is the smartest way to go, and this is usually the first step in any LRBA irrespective of where the property is located. Set up a company that can act as the holding trustee. Why is a company better? Companies don’t die, they don’t lose capacity and they don’t get divorced, so it is easier to change the directors rather than the names of individuals on a property title. Also, many lenders won’t lend unless the holding trustee is a company.  

Some members want to use their own name as the purchaser and note ‘and/or nominee’, that is, “Jack and Jill Mogul and/or nominee”. In some states, such as NSW, this could result in ad valorem duty being charged when Jack and Jill nominate the holding trustee as the alternative purchaser, as this can be seen as a ‘sub-sale’. Currently Victoria is the only state where ‘and/or nominee’ can be used, but you should check the rules with a local conveyancer. 

The name of the purchaser on the contract for NT property is very specific. It needs to be “Holding Trustee Pty Ltd ACN as trustee for Name of Holding Trust as bare trustee for Fund Trustee Pty Ltd ACN as trustee for Name of Fund ABN”. 

In WA, the word ‘for’ must be used between the holding trustee and SMSF trustee names. It should be “Holding Trustee Pty Ltd ACN for Super Fund Trustee Pty Ltd ACN”.


If the vendor is a related party to the members of the SMSF, there are limitations on the assets that may be acquired. In particular, residential property could not be acquired from a related party in most instances.


Similarly, if the proposed tenant is a related party to members of the SMSF, the SIS legislation permits such an arrangement so long as the property is business real property and the lease is legally enforceable. If the property is residential property, it must not be leased to a related party.

Full Credit for this article to: Michael Harkin, national manager of training and advice, Topdocs

Health and Wellness

Health and wellness are not synonyms. Health refers simply to a physical body being free from diseases, but wellness is an overall balance of your physical, social, spiritual, emotional, intellectual, environmental, and occupational well-being. Wellness is a lifestyle and is not an end to be achieved. Wellness means that one strives for balance throughout his whole life. On the other hand, health would be that a person wants to lose weight and lower blood pressure. Once he does this, he is considered healthy. Health is a goal one can achieve, while wellness is a dynamic concept that continues for a lifetime.

1. Social

Developing a sense of connection, belonging, and a well-developed support system

Social Wellness is the ability to relate to and connect with other people in our world. Our ability to establish and maintain positive relationships with family, friends and co-workers contributes to our Social Wellness.

2. Emotional

Coping effectively with life and creating satisfying relationships

Emotional Wellness is the ability to understand ourselves and cope with the challenges life can bring. The ability to acknowledge and share feelings of anger, fear, sadness or stress; hope, love, joy and happiness in a productive manner contributes to our Emotional Wellness.


3. Spiritual

Expanding a sense of purpose and meaning in life

Spiritual Wellness is the ability to establish peace and harmony in our lives. The ability to develop congruency between values and actions and to realize a common purpose that binds creation together contributes to our Spiritual Wellness.

4. Environment

Good health by occupying pleasant, stimulating environments that support well-being

Environmental Wellness is the ability to recognize our own responsibility for the quality of the air, the water and the land that surrounds us. The ability to make a positive impact on the quality of our environment, be it our homes, our communities or our planet contributes to our Environmental Wellness.

5. Occupational

Personal satisfaction and enrichment from one’s work

Occupational Wellness is the ability to get personal fulfillment from our jobs or our chosen career fields while still maintaining balance in our lives. Our desire to contribute in our careers to make a positive impact on the organizations we work in and to society as a whole leads to Occupational Wellness.

6. Intellectual

Recognizing creative abilities and finding ways to expand knowledge and skills

Intellectual Wellness is the ability to open our minds to new ideas and experiences that can be applied to personal decisions, group interaction and community betterment. The desire to learn new concepts, improve skills and seek challenges in pursuit of lifelong learning contributes to our Intellectual Wellness.

7. Physical

Recognizing the need for physical activity, healthy foods, and sleep

Physical Wellness is the ability to maintain a healthy quality of life that allows us to get through our daily activities without undue fatigue or physical stress. The ability to recognize that our behaviors have a significant impact on our wellness and adopting healthful habits (routine check ups, a balanced diet, exercise, etc.) while avoiding destructive habits (tobacco, drugs, alcohol, etc.) will lead to optimal Physical Wellness.


8. Financial

Satisfaction with current and future financial situations

Financial wellness is an intricate balance of the mental, spiritual and physical aspects of money. This unique combination is an ideal to strive towards in our dealings with money.

Financial wellness is having an understanding of your financial situation and taking care of it in such a way that you are prepared for financial changes. Maintaining that balance consists of being comfortable with where your money comes from and where it is going.